TDS Certificate : Form 16D Details

Form 16D is a TDS Certificate issued by a Payer for payment of a commission, brokerage, contractual fee, the professional fee under section 194M. It contains details of the nature of payment and TDS deducted on it. Section 194M has been applicable from the 1st of September 2019. Thus, Form 16D can be downloaded from FY 2019-20 onwards. The taxpayer can download Form 16 from the TRACES portal.

As per the section, if the payments to resident contractors and professionals exceeding INR 50,00,000 Lakhs during the Financial Year, the payer/deductor has to deduct tax at the rate of 5% from the sum payable to a resident payee/deductee.

Upload Form 16
File ITR Online

India’s fastest growing Tax Filing Platform

[Rated 4.8 stars by customers like you]

Upload Form 16

File ITR Online

India’s fastest growing Tax Filing Platform

[Rated 4.8 stars by customers like you]

As per the Central Board of Direct Taxes (CBDT) notification, the due date of payment of TDS on payments to resident contractors and professionals is within a period of thirty days from the end of the month in which the payment has been made. Hence, Form 16D has to be issued 15 days from the date of issuance of Form 26QD.

For example, A professional payment of INR 65 Lakhs has been made in the Financial Year 2019-2020. The payment is made on the 15th of August. Hence, the tax deducted must be deposited with the government and Form 26QD should be filed on or before the 30th of September. Furthermore, the deductor should also issue the Form 16D TDS certificate by October 15.

Sample Form 16D

Details of Form 16D

  • Name and address of Deductor and Deductee
  • PAN/Aadhaar number of the Deductor and Deductee
  • Financial Year of Deduction
  • Transaction Details
  • Details of Tax Deposited
  • Challan Identification Number

FAQs

Who is responsible to deduct the TDS on payments to resident contractors and professionals under section 194M?

The Payer/Deductor being an Individual or a HUF (not liable to tax audit u/s 44AB) would have to deduct the TDS at the rate of 5% and deposit the same with the government by filing Form 26QD.

What is Form 26QD?

The Form 26QD is the challan-cum-statement for reporting the transactions liable to TDS on payments to resident contractors and professionals under section 194M of the Income-tax Act, 1961.

Is Form 16D different from Form 16A?

Form 16D is the TDS Certificate issued by a taxpayer i.e. payer to the deductee i.e. payee with details of nature of payment and TDS deducted on it u/s 194m.
Form 16A is the TDS Certificate issued by a deductor for non-salary payments like professional fees, brokerage, commission, interest, rent, contractual payment, etc. It contains details of the nature of payment and TDS deducted on it.

What is the due date of payment of TDS deducted on the payment made to the resident contractors and professionals u/s 194M?

The due date of payment of TDS on payment made to the resident contractors and professionals is within a period of thirty days from the end of the month in which the payment has been made. Moreover, the Form 16D has to be issued within 15 days from the date of issuance of Form 26QD.

What is the fee in Form 26QD and when is it applicable?

As per section 234E of the Income-tax Act, 1961 read with Rule 31A (4B) of Income-tax Rules, 1962, failure on part of deductor (Payer/Deductor) to furnish challan-cum-statement in Form 26QD electronically within 30 days from the end of the month in which the tax deduction is made will attract levy of fee for default in furnishing statement at the rate of INR 200 for every day to be paid by the deductor (Payer/Deductor).

Form 26QD : TDS on Contractual and Professional Payments

The CBDT had announced that Individuals/HUFs making contractual or professional payments need to deducted TDS under section 194M from FY 2019-20 (1st Septemeber, 2019). TDS is deducted at 5% if the paid amount exceeds INR 50,00,000 and TDS Return for the same needs to be filed in Form 26QD. The payee gets Form 16D as proof of TDS Deduction.

Let us take an example: A person has made paid a professional INR 55 Lakh on July 20th in the Financial Year. Hence, the tax deducted by the person must be deposited with the central government on or before August 30. Therefore, the person must also issue the TDS certificate (Form 16D) by September 15.

Steps to Fill Form 26QD

  1. Visit the Income Tax e-Filing portal

    Click on the “e-Pay Tax | Challans” option under the Quick Links section.

  2. Click on the “Continue to NSDL Website” option.

    A pop-up message will appear on the screen.

  3. Click on the “Proceed

    Click on the “proceed” option under the Form 26QD section.

  4. Fill up the form with the required details like Tenant, Landlord, TDS, Property etc.

    Click on the “Submit” option to complete the process.

Details Required in Form 26QD

  • PAN of Deductor/Payer
  • PAN of Deductee/Payee
  • Nature of payment (work in pursuance of a contract/commission/brokerage or fees for professional services)
  • Date of contract/agreement
  • Amount paid
  • Number of the certificate under section 197 issued by the Assessing Officer for non-deduction or lower deduction
  • Date of credit
  • The rate of TDS
  • Details of payment of TDS
Ask an Expert (TDS)
Talk to an expert via call, whatsapp or message. Ask questions about TDS Deduction, TDS Return Filing and Compliance.
[Rated 4.8 stars by customers like you]
Ask an Expert (TDS)
Talk to an expert via call, whatsapp or message. Ask questions about TDS Deduction, TDS Return Filing and Compliance.
[Rated 4.8 stars by customers like you]

FAQs

What is the due date to file Form 26QD?

Form 26QD has to be filed by the 30th of next month of the deduction of the TDS. For example, the TDS of October has to be deposited by the 30th of November of the same year. TDS of November has to be deposited by 30th of the December and not 31st of December.

What is the penalty for late deposit?

Interest @1% is levied if there is a delay in the deduction of TDS. Similarly, 1.5% interest is levied if there is a delay in the deposition of the TDS. Moreover, a late fee of INR 200 per day has to be paid for the late filing of Form 26QD. This penalty cannot be more than the TDS amount.

When will I receive Form 16D?

Form 16D will be given to the payee within 15 days from the date of filing of Form 26QD. It will be provided by the payer/deductor.

Section 194M : TDS on Payment to Resident

What is Section 194M?

Tax Deducted at Source (TDS) is an indirect method of collecting Income Tax. TDS is based on the principle of “Pay as you earn” which is beneficial for both Government as well as taxpayer.

Further, Tax Deducted at Source (TDS) is a concept where a person making payment of specified nature is liable to deduct tax at a prescribed rate and also deposit the same with the Government. The TDS rates applicable under different sections & subsection are between 1%- 30%.

Further, Individuals and HUFs not liable to deduct TDS u/s 194C, 194H or 194J have to deduct TDS u/s 194M.

Section 194M covers various payments such as the Payment of commission (not being insurance commission), brokerage, contractual fee, the professional fee to a resident person by an individual or a HUF who are not liable to tax audit as per Income Tax Act.

As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%
Tip
As per section 206AA if the deductee fails to provide the PAN to deductor then he would suffer deduction at higher of the rates of deduction as: At the rate specified in the relevant provision of the Act, or, At the rate or rates in force, i.e., the rate prescribed in the Finance Act (Finance Act 2019 for FY 2019-20), or At the rate of 20%

Understanding Section 194M

The Finance Minister announced the introduction of Section 194M, regarding tax deduction at source from any money which an individual or HUF pays to a resident contractor when the services are provided for personal use. Priorly, individuals and HUFs were not liable to deduct TDS for personal or business-related payments.

Hence, in such cases, the books of accounts are to be audited if the turnover of business exceeds 1 Cr. Also, the books of accounts have to be audited even if the total turnover of a profession exceeds 50 Lakhs. This means Section 194M applies to both, personal and business-related payments.

Therefore, individuals and HUFs have to deduct TDS u/s 194C and 194J if the books of accounts have to be audited. Moreover, TDS on commission or brokerage is deducted under section 194H. Furthermore, payments to non-residents are not covered under this section.

The deductors (Individuals & HUF) do not require a TAN (Tax Account Number) to deduct tax u/s 194M. They can do so by quoting their PAN to the government.

As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%
Tip
As per section 206AB, if the aggregate of TDS and TCS for deductee is INR 50000 or more in each of these two previous years and deductee has not filed the returns of income for two previous years immediately prior to the previous year in which tax is required to be deducted then he would suffer deduction at higher of the rates of deduction as: At twice the rate specified in the relevant provision of the Act; or At twice the rate or rates in force; or At the rate of 5%

Rate of TDS u/s 194M

The TDS is deducted u/s 194M if the turnover of the business or profession exceeds the amount of INR 1 Cr or INR 50 Lakhs respectively in a financial year. The TDS will be deducted at a rate of 5%. TDS will be deducted at a rate of 20% if the deductee does not possess a PAN card.

The CBDT has notified that any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied with a challan-cum-statement in Form No. 26QD.

Hence, every person that deducts TDS u/s 194M is responsible to furnish the certificate of deduction of tax at source in Form 16D. TDS certificate has to be furnished to payee within 15 days from due date of furnishing statement in Form 26QD. The individual can download Form 16D from the TRACES portal.

FAQs

What is the time limit on depositing TDS?

The due dates for the payment of the deducted TDS are on or before the 7th of next month. It means if the deductor has deducted tax from payments in the month of July, then he has to pay the TDS on or before the 7th of August.

Who has to deduct TDS u/s 194M?

An individual or HUF, who has to make payment to a resident for a contract work completed or any professional service provided, will have to deduct tax at source u/s 194M.
As per the Union Budget 2019, any individual/HUF paying any sum to a resident, for carrying out any work (including the supply of labor) under any contract or by way of fees for professional services rendered during the financial year, exceeding INR 50,00,000 in a year will have to deduct TDS at the rate of 5%.

What is a tax audit report?

The indirect tax is implied on the income received from financial products. These financial products can be mentioned as:
> Interest received on fixed deposits,
> Incentives from the employer,
> Commission’s payments,
> Dividends on bonds,
> Sale/purchase or rent of any immovable property and money earned as lottery